New Jersey retirement taxes at a glance (2026)
| State income tax | Graduated, top rate 10.75%New Jersey has graduated rates from 1.4% to 10.75%. The top rate applies to income over $1 million. |
|---|---|
| Social Security | Not taxedNew Jersey does not tax Social Security benefits. |
| Pensions | Partly taxedTaxpayers age 62 or older (or disabled) with total income of $100,000 or less can exclude up to $100,000 (joint), $75,000 (single), or $50,000 (married filing separately) of pension, annuity, and IRA income. The exclusion shrinks between $100,001 and $150,000 and ends above $150,000. Exclusion: up to $100,000 (age 62+). |
| 401(k) and IRA withdrawals | Partly taxedTaxable IRA withdrawals count toward the same pension exclusion. Above the exclusion or the $150,000 income limit, withdrawals are taxed. |
| Government pensions | Partly taxedGovernment pensions are taxed like private pensions but qualify for the same age-62 pension exclusion. |
| Military retirement pay | Not taxedU.S. military pensions and survivor benefit payments are exempt. |
| Estate tax | No |
| Inheritance tax | YesNew Jersey has an inheritance tax of 0% to 16% based on the heir's relationship. Spouses, civil union partners, children, and grandchildren are exempt. |
| Property tax help for seniors | Stay NJ reimburses homeowners 65 and older for 50% of their property tax bill, up to a $13,000 bill (up to $6,500 benefit). Senior Freeze reimburses property tax increases for people 65+ or disabled with income under $172,475. |
| Sales tax | Combined state and local sales tax averages about 6.6%. |
Recent changes and good to know
- The 2026 exclusion amounts and income tiers are unchanged from prior years. Bill S3689 (2026-2027 session) proposes to extend the exclusion above $150,000; it is not law as of this research.
- An 'other retirement income exclusion' may apply if wages and business income are $3,000 or less.
- The estate tax was repealed in 2018; the inheritance tax remains.
How to lower your retirement taxes in New Jersey
- Mix your income sources. Roth IRA withdrawals are tax-free at the federal level and generally in New Jersey too, so a Roth conversion before retirement can cut state tax later. Try the Roth conversion calculator.
- Watch federal Medicare costs. Large IRA withdrawals can raise your Medicare premiums. Check the 2026 IRMAA brackets.
- Think about your heirs. See what your IRA will really cost your family with the Family Tax Rate calculator.
- Comparing states? These have no state income tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, Wyoming.
Frequently asked questions
Does New Jersey tax retirement income?
Partly. New Jersey does not tax Social Security or military pensions, and retirees 62+ with income up to $150,000 can exclude much of their pension and IRA income.
Does New Jersey tax Social Security?
New Jersey does not tax Social Security benefits.
Does New Jersey tax pensions?
Taxpayers age 62 or older (or disabled) with total income of $100,000 or less can exclude up to $100,000 (joint), $75,000 (single), or $50,000 (married filing separately) of pension, annuity, and IRA income. The exclusion shrinks between $100,001 and $150,000 and ends above $150,000.
Does New Jersey tax 401(k) and IRA withdrawals?
Taxable IRA withdrawals count toward the same pension exclusion. Above the exclusion or the $150,000 income limit, withdrawals are taxed.
Does New Jersey tax military retirement pay?
U.S. military pensions and survivor benefit payments are exempt.
Does New Jersey have an estate or inheritance tax?
New Jersey has an inheritance tax of 0% to 16% based on the heir's relationship. Spouses, civil union partners, children, and grandchildren are exempt.
Sources (last verified 2026)
- Retirement Income Exclusions — NJ Division of Taxation (2025-12-03)
- New Jersey Tax Facts for 2026 Tax Season — AARP (2026-04-06)
- State Individual Income Tax Rates and Brackets, 2026 — Tax Foundation (2026-02-17)
- NJ S3689 (2026-2027) — LegiScan (2026)
Educational content only, not tax, legal or investment advice. Plans and tax laws change; confirm details with your employer's plan documents or your state revenue department. Smart Financial Lifestyle is not affiliated with any employer named on this site.